It’s surprisingly common: a parent leaves everything to one child and simply tells them, “You know what to do—just split it with your siblings.” But here’s the problem—this puts emotional pressure and financial risk on that child. Even if they do follow through, they might trigger unintended tax consequences, especially if the assets aren’t easy to divide or carry income tax liability (like pre-tax retirement accounts).
Under current rules, most non-spouse beneficiaries of inherited retirement accounts must fully withdraw the funds within 10 years. That means if you leave a large pre-tax IRA to one child with verbal instructions to “share it,” not only are they responsible for dividing the funds, but they’re also on the hook for all the taxes—often during their highest earning years. That’s not just unfair—it can be financially damaging
Take time to review your full estate plan—wills, trusts, and especially beneficiary designations. Make sure your retirement accounts, life insurance policies, and bank accounts reflect your actual intentions. Use tools like Transfer on Death (TOD) or Payable on Death (POD) designations to divide assets automatically and clearly. Don’t assume your family will “work it out.” Your legacy deserves clarity, not conflict.
If you are ready to take control of your financial future and want personalized guidance, book a financial planning session through your participant portal or the Francis LLC app, which can be found on the Apple app and Google play store or give us a call at 866-232-6457.
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